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Farfetch is making an investment of up to $200 million in Neiman Marcus Group (NMG) as the two prominent luxury fashion retailers forge a partnership, according to an announcement issued Tuesday.
NMG, which is the parent of Neiman Marcus and Bergdorf Goodman, is set to use proceeds from the minority investment to advance technology and digital capabilities. This will include tapping into the capabilities of Farfetch, which operates a marketplace for luxury fashion products.
In the immediate term, the companies will take the following steps together, according to a news release:
- Using its retail technology tools, known as Farfetch Platform Solutions, Farfetch will re-platform the Bergdorf Goodman website and mobile application.
- A digital customer experience and curated offering will be introduced to customers globally, including at its flagship in New York.
- Neiman Marcus will use select modules from FPS , including international services.
- Neiman Marcus and Bergdorf Goodman will join the Farfetch marketplace as partners, adding brands in “key global geographies.”
The partnership brings together an iconic name that started with in-person retail in NMG with the digitally native Farfetch. It’s a move with international expansion in mind, and shows how integrating physical and digital retail are becoming key parts of plans for growth. Luxury brands were historically cool to collaboration, but the growth of ecommerce ushered in a change in thinking. Farftech has been at the forefront of the move to form alliances in recent years, both via investment and acquisition.
“I believe the US luxury market is at a pivotal point,” Farfetch CEO José Neves said in a statement. “Whilst the US is proving to be a long-lasting source of growth for the luxury industry, fueled by younger generations who are highly engaged with the category, businesses will have to significantly upgrade their digital capabilities – powering both online and offline customer journeys – to meet these new customer expectations and stay ahead in what is going to be a competitive space in the coming years.”
Neves added that the partnership “is about revolutionizing the luxury landscape globally, both online and offline, by combining NMG’s iconic presence in the US and Farfetch’s Luxury New Retail vision and technology.”
The announcement comes days after Bergdorf Goodman made a pair of key promotions that were in part centered around digital offerings. Cheryl Han was appointed to Senior Vice President of BergdorfGoodman.com and Customer Strategy, while Melissa Xides was named Senior Vice President of Bergdorf Goodman Stores and Brand Operations.
The Farfetch partnership the latest tech-centered move for NMG that comes amid the growth of ecommerce in the pandemic. NMG leaders said in 2021 that the company would invest $500 million in capabilities including upgrading delivery and personalization over the next three years, Vogue Business reported at the time.
With Tuesday's announcement, NMG CEO Geoffroy van Raemdonck called Farfetch “the ideal partner to help us grow Bergdorf Goodman to be an even stronger global digital luxury retailer.”
“Farfetch’s investment demonstrates their confidence in our omnichannel strategy, and we look forward to partnering with Farfetch to continue revolutionizing the luxury customer experience and delivering value to all our stakeholders,” van Raemdonck said in a statement.
The investment and partnership is expected to be completed in the third quarter of 2022.
Trending in Retail Channels
Microservices architecture allows the company to give retailers ownership over omnichannel software.
With the growth of digital commerce, providing consumer choice is at the center of all of a retailer’s operations.
In recent years, that became especially evident in the area of fulfillment.
Ecommerce made the process of moving an order into place for delivery a crucial function, as the ability to source products close to demand quickly was an imperative.
“Retailers are looking to own more of their fulfillment destiny because consumer expectations have increased,” Chap Achen, VP of product strategy and operations at Nextuple, told The Current on the floor of the NRF Big Show 2023. “Fulfillment is now a competitive weapon.”
As digital operations increasingly blend with the physical store, a host of new fulfillment options are coming online. They can have an item delivered from the store on the same day, or they pick it up. Even a wider offering such as in-store pickup has a host of different choices inside of it. Consumers can pick up an item at a counter, or a locker. They can stop by anytime, or schedule a pickup on Saturday.
While this optionality helps retailers meet customers where they are, it also adds complexity to the systems that run them, and requires operational adjustments to put them in place.
It means the software that powers fulfillment operations must also meet retailers where they are, Achen said. Many retailers have specific setups and processes. They may have a store located in a mall with a nearby distribution center, or a series of small storefronts. At the same time, retailers need to have flexibility with the software that they use so they can provide options to consumers.
For Nextuple, the vehicle to provide this is microservices, which describes a software architecture in which the parts of an application work independently, but are also built to work together. The company harnesses microservices to offer an ownership-centered approach to deploying its software through a product called Nextuple Fulfillment Studio.
“Today, there are only two ways to buy software: [software as a service] or custom building,” Achen said. “You can do it yourself or with a partner. We are a third option. We will help you accelerate your time to market because we've already developed 80% of your requirements, and then we'll give you that as source code.”
The software is composable. Retailers own the source code, and they can iterate. Along the way, they have the ability to swap out components of the software for pieces that enable them to better respond to the needs of customers, if they choose.
It shows how composable commerce is spreading throughout retail operations. A first wave of development applied the approach to the “front-end” of commerce, such as operating an ecommerce store and marketing. With fulfillment software such as Nextuple coming online, there are signs it is being applied to backend operations, as well.
In all, Nextuple offers 14 microservices as part of the Studio, including engines for same-day delivery, storage, inventory management and sourcing.
At the NRF Big Show, Nextuple announced that it is live with five national omnichannel retailers. Together, they have $50 billion in annual revenue and 7000 store locations.
The company is aiming to serve a group of retailers that are widely known, but still looking to hone operations for omnichannel retail. When it comes to fulfillment technology, the retail landscape has distinct tiers.
The largest players have built their own fulfillment tech to power logistics networks that reach across the country.
Name brand retailers with a national presence also want to offer competitive fulfillment, but haven’t made the move to acquire platforms or developed their own software in-house. Typically, they would seek out a software provider that offers a set platform on a subscription model. But the particular needs of commerce require software that powers physical operations with digital tools. That requires a different type of solution, Nextuple believes.
“We want to level the playing field,” Achen said. “We're helping the mid-tier [retailer] compete with Target, Amazon and Walmart.”